Insured losses from Thailand flood likely to range from $4.5 billion to $5.85 billion

Thailand’s Office of Insurance Commission (OIC) estimates the insured losses caused by flooding so far to be US$4.5 billion, reported Guy Carpenter.
The country has experienced its worst flooding in years over the past few months, leaving more than 420 people dead and causing severe damage across northern and central regions of the country. At least seven huge “industrial estates” have been forced to close, driving up the insured losses.
Many of these industrial estates house both local and international factories and businesses, with large numbers making electronic components and car parts, Guy Carpenter reported.
“The production of cars, electronics and other goods has been suspended as hundreds of factories are under water. Disruption to supply chains has also halted operations, raising fears that the flooding may have a knock-on affect on global manufacturing,” the report says.
“Indeed, officials expect disruption to operations to last several months and are warning the floods could have a similar impact on production as the Tohoku earthquake in March. Thailand plays a critical role in the global supply chain and companies are therefore seeking alternative production facilities or supply routes for parts.”
The OIC estimates that the seven major industrial estates have a combined insurance coverage of $14.5 million. Other government agencies suggested insurance coverage of the industrial estates is closer to $19.5 billion, 30% of which may eventually be paid out.
“The OIC estimates that about 80% of the commercial losses are expected to be covered by Japanese insurers. But, Fitch said they in turn are unlikely to be significantly affected given that about 85% of their coverage is ceded to foreign reinsurers.”